Ghosn Forecasts U.S. SAAR at 16 Million

DETROIT – Generally more aggressive than some of its counterparts, Nissan Motor Co. Ltd. is pulling back on predictions for U.S. industry sales in 2007.

“I don’t want to have another surprise,” Nissan CEO Carlos Ghosn says, explaining why Nissan is calling for a seasonally adjusted annual sales rate of 16 million vehicles in the U.S. in 2007.

Nissan forecasted a 16.8 million SAAR for the U.S. in 2006, however the market reached only 16.5 million.

“We think it’s going to be a challenging year for all manufacturers (globally),” Ghosn says, adding all developed markets are either stagnant or slumping, including Europe and Japan.

“Don’t be surprised if you see much more discretion from Nissan (going forward),” he says.

Ghosn tells a select group of journalists at a Nissan evening event at the 2007 North American International Auto Show here that the auto maker was surprised by a slump in light-truck sales last year, as well as decreased demand for its passenger cars in first-half 2006.

“We were expecting this market to hold better than what we have seen in October, November, and December,” he says of last year’s slow U.S, fourth quarter.

The Japanese auto maker saw its U.S. sales tumble 5.3% to 1,019,461 units in 2006. Nissan had called for double-digit growth in the U.S. in the last half of its fiscal year, ending March 31.

“Hopefully in 2007, we’re going to have a different story,” Ghosn says.

Nissan is launching a new small cross/utility vehicle, the Rogue, this year, as well as an all-new version of its luxury Infiniti G coupe.

Ghosn says while the first months of new G35 sedan sales in the U.S. have been good, “we still want to see how this is going to develop.” The new G35 sedan went on sale here in November.

Despite weakness in the U.S., Ghosn says he does not see a slowdown in major markets affecting Nissan’s goals under its latest business plan, Value Up, which targets 4.2 million sales globally by the end of fiscal 2008.

However, “the improvement of our profitability is probably not as much as we thought it would be because of these adverse conditions,” he says.

As for a future near-term alliance with another auto maker, Ghosn is proceeding cautiously. Nissan famously tried to align with General Motors Corp. last year until GM halted talks in October.

“If this opportunity comes back, we’ll look at it very seriously,” Ghosn says, while stressing his first priority is making sure plans for Nissan and its long-time partner, French auto maker Renault SA, are on track.

Ghosn also predicts industry alliances and regroupings will increase in 2007, as a third straight year of increasing raw materials prices continues to impact global auto makers.

“Suppliers are knocking at our door and saying, ‘Hey guys, how about another price increase?’ I don’t think anybody’s going to be spared,” Ghosn says.

Raw materials increases have become impossible to offset, he says, blaming profit-sapping sales incentives. “When we take a price increase on a commodity, there’s nothing we can do to pass even part of it (on).”

Meanwhile, Ghosn says a vehicle like the low-priced Renault Logan may be headed to the U.S. “Products like this are coming here, (and) the Chinese and Indians will bring (them) if we don’t.”

The no-frills Logan has sold well in Europe and other world regions without any advertising or marketing support, he says.

The trick will be to sell such a vehicle in developed markets at a profit, Ghosn says. “Anybody can bring an $8,000 car and sell it at $10,000. It’s harder to do the reverse.”

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